Income Taxes |
9 Months Ended |
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Jun. 26, 2022 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes We estimate our annual effective income tax rate to be 13% for fiscal 2022, which is lower than the U.S. federal statutory rate primarily due to (i) a significant portion of our income qualifying for preferential treatment as foreign-derived intangible income (FDII) at a 13% effective tax rate, (ii) the reversal of the 2018 EC fine (Note 6), which is not taxable and is attributable to a foreign jurisdiction, (iii) excess tax benefits associated with share-based awards and (iv) benefits from our federal research and development tax credit. Our effective tax rate of 12% for the third quarter of fiscal 2022 was lower than our estimated annual effective tax rate of 13% primarily due to the benefit from the reversal of the EC fine in the third quarter, partially offset by $47 million of net discrete tax charges, which principally related to foreign currency losses on a noncurrent receivable related to our refund claim of Korean withholding tax, partially offset by excess tax benefits associated with share-based awards that vested in the third fiscal quarter. Our effective tax rate of 10% for the third quarter of fiscal 2021 included $64 million of discrete net tax benefits, which principally related to excess tax benefits associated with share-based awards that vested in the third fiscal quarter.
Unrecognized tax benefits were $2.2 billion and $2.1 billion at June 26, 2022 and September 26, 2021, respectively, and primarily related to our refund claim of Korean withholding tax. If successful, the refund will result in a corresponding reduction in U.S. foreign tax credits. We expect that the total amount of unrecognized tax benefits at June 26, 2022 will increase in the next 12 months as licensees in Korea continue to withhold taxes on future payments due under their licensing agreements at a rate higher than we believe is owed; such increase is not expected to have a significant impact on our income tax provision.
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